IT Outages Cause Businesses $26.5 Billion in Lost Revenue Each Year, Survey

North American enterprises experience outages lasting about 10 hours each year, collectively adding up to $26.5 billion in revenue losses, according to a CA Technologies study.

North American businesses suffer an average of 10 hours of IT downtime
annually, collectively costing them $26.5 billion in revenue, according to a
study released by CA Technologies Dec. 9.
In a series of interviews with CIOs, IT directors, and IT managers from 200
companies spanning the financial services, manufacturing, retail, and public
sectors, researchers calculated the financial losses incurred when businesses
cannot quickly recover from service outages. For the purposes of this
study, outages are attributable to hardware failures or security breaches. The
companies range in size from small businesses with 50 employees to large
organizations with more than 1,000 employees.

Respondents estimated their ability to generate revenue is reduced by 29
percent, according to the study. Financial services are impacted the most by
downtime, with the average company losing $224,000 or more in revenue each
year. Public-sector organizations are impacted the least, with the average
organization losing $99,000 in revenue, according to the report. However, the
public sector tends to experience the highest amount of downtime, at an average
of 16.6 hours per year, compared with the overall average of 10 hours, the
report said.

In terms of total revenue, however, the retail sector is hit
"significantly hardest," accounting for $18.8 billion in lost
revenues per year, compared with the public sector's $4.46 billion.
Even after service is restored, businesses generally still experience an
average of 7.5 hours where they are limited operationally because of data
recovery issues, the report found. The ability to generate revenue is still
impacted, by about 17 percent, IT managers told researchers.
Departments most likely to experience downtime are operations, at 62
percent, followed by finance, at 48 percent, and procurement, at 39 percent,
according to CA.
In actual dollar amounts,
small companies seem to do better, with the average small company
losing about $55,000 in revenue each year, compared with an average large
company losing $1 million. However, small companies appear to suffer more, with
their ability to generate revenue reduced by 39 percent, compared with 19
percent for midsize companies and the overall average of 29 percent. Smaller
companies also struggle with data recovery, with their revenue-generating
abilities reduced by 23 percent, the report said.
Compared with a parallel study of 1,808 companies across 11 European
countries earlier this year, North American organizations generally lose about
54 percent less revenue than their European counterparts, CA said. Researchers
said that even though both regions suffer similar numbers of outages per year,
outages at European companies tend to last longer. The total downtime per
outage in Europe is 10.3 hours.
Despite the severity of outages being higher, European companies
collectively lose $23.5 billion, or $3 billion less than the North American
companies, according to the report.
The researchers wrote that "most of this considerable cost to
businesses" can be "avoided" through better data protection strategies.
"IT organizations can't always prevent service
outages, but they can take the right steps to improve the speed of recovery
when outages occur," said Mike Crest, general manager of data management
at CA Technologies.
IT departments tend to focus on efficient ways to securely back up critical
systems and neglect to consider the speed of recovery, the report said. With
myriad products offering system and data protection, recovery, and
availability, organizations can assess their existing disaster recovery plans
to minimize the time required to be back up and running after an outage, the
researchers wrote.
Crest said the ability to recover from physical hardware failure and data
corruption will become "even more important" as businesses shift
toward cloud services.